Nine named in Rezko trial have connection to teacher's retirement system

Monday

Mar 31, 2008 at 12:01 AMMar 31, 2008 at 12:46 PM

The marquee name in the Tony Rezko political corruption trial is Gov. Rod Blagojevich. Interest also has been piqued because Rezko was a fundraiser for presidential candidate Sen. Barack Obama. But at least 10 Springfield-area residents also played roles in the scenario that federal prosecutors have put together in building the case against Rezko. Nine have a connection to the Illinois Teachers' Retirement System.

Bernard Schoenburg and Bruce Rushton

The marquee name in the Tony Rezko political corruption trial is Gov. Rod Blagojevich. Interest also has been piqued because Rezko was a fundraiser for presidential candidate Sen. Barack Obama. But at least 10 Springfield-area residents also played roles in the scenario that federal prosecutors have put together in building the case against Rezko.

People who played larger roles in what prosecutors say are Rezko’s schemes tend to be named in either the indictment against him, a 77-page evidence “proffer” submitted by prosecutors shortly before the trial or in actual trial testimony.

Central Illinoisans in that group include Bill Cellini, Bob Kjellander, Phil Schmidt, Jon Bauman and Bill Cavanagh, all of Springfield, and James Bruner of Jacksonville.

Several others were identified in a “voir dire” document given to prospective jurors in the case. Jurors were asked to review the list — which included 237 names — to see if they were acquainted with any of those mentioned. Springfieldians on the list included Phil Bradley, Mike Bartletti, Stan Rupnik and Bill Enlow.

None of the 10 have been charged with any crimes.

All but one of the area residents were somehow involved with the Illinois Teachers’ Retirement System, which Rezko is accused of trying to corrupt. Bradley was a member of the Illinois Health Facilities Planning Board, another agency on which prosecutors are focusing.

Here is how all those mentioned factor into the trial.

BILL CELLINI, 73, of Springfield

Cellini is a developer who has played a major role in Springfield and Illinois politics for more than 40 years. Cellini led the team that built the President Abraham Lincoln Hotel and Conference Center (recently taken over by the state), headed a riverboat casino company that was bought out in 2004, and co-founded the New Frontier Companies, which specializes in rent-subsidized housing units and government rentals. He served on the Springfield City Council and as Illinois secretary of transportation early in his career.

Connection to Rezko trial:

In Rezko’s indictment, Cellini is referred to as “Individual A.” In the proffer, he is “Co-Schemer A.”

The indictment says that Individual A was one of at least six people who “devised and intended to devise, and participated in, a scheme and artifice to defraud the beneficiaries of TRS and the people of Illinois of money, property, and the intangible right to Levine’s honest services.”

Rezko and Stuart Levine, who has pleaded guilty and is the prosecution’s chief witness against Rezko, are accused of agreeing to extort at least $1.5 million from a principal of Capri Capital Advisors, a firm that wanted to invest $220 million of TRS’s money in 2004.

Rezko and Levine decided to demand either $2 million from Capri that would go to a “consultant” of their choosing or $1.5 million in political contributions to “a certain public official.” If Capri decided to pay the consultant, Rezko and Levine were to split the $2 million, prosecutors say.

At Rezko and Levine’s behest, prosecutors said, “Individual A told (the Capri principal) words to the effect that (Capri) had not gotten its $220 million allocation from TRS because of its failure to make political donations. On or about May 8, 2004, (the Capri principal) advised Individual A that he would not be extorted. Individual A advised Levine about this conversation and told Levine that (the Capri principal) had threatened to inform law enforcement about what Rezko and Individual B were doing.”

Faced with the threat of being turned in, Individual A, Individual B, Rezko and Levine stopped demanding money from Capri and also ceased efforts to block the investment firm’s dealings with TRS, according to prosecutors.

Prosecutors also say Individual A tried to discourage the Capri principal from telling anyone about the attempted extortion.

Cellini also opposed a plan considered early in the Blagojevich administration to consolidate investment activities from the five state-funded pension systems.

“Levine and Co-Schemer A were opposed to the proposal … because it might cause them to lose their control at TRS,” the proffer stated.

The effort eventually came to nothing, partly, according to prosecutors, because Rezko and another man — later identified as Blagojevich fundraiser Chris Kelly — agreed they would use their influence against the consolidation. The quid pro quo was that firms they recommended would get TRS business and, in turn, would make election contributions to “Public Official A,” who has been identified as Blagojevich.

TRS, as of late 2006, had more than $800 million invested through a firm founded by Cellini. Bauman said at the time that the firm, now in the hands of Cellini’s children, had provided returns of between 19 percent and 21 percent over five years.

According to the proffer, Levine and Cellini had so much influence over the TRS that one staff member called Levine “the Rabbi” and Cellini “the Pope.”

Cellini did not return telephone calls last week, but he has previously denied any wrongdoing.

BOB KJELLANDER, 60, of Springfield

Kjellander is a consultant with Springfield Consulting Group and Republican National Committeeman from Illinois.

Connection to Rezko trial:

When Levine reached his plea agreement with the government in October 2006, he admitted scheming to get millions of dollars in kickbacks and other payments from companies doing business with state boards. The plea agreement mentioned an “Individual K,” later identified as Kjellander. Levine’s testimony two weeks ago bore out that identification.

In court, Levine, who had been a member of the TRS board, said Kjellander asked if Levine could help get investment business for the Carlyle Group, a client of Kjellander and Cellini.

“Mr. Kjellander is a very close associate of Mr. Cellini,” Levine testified, according to a story in the Chicago Sun-Times. “And I was happy to help him.”

After Carlyle won the investment, Cellini visited Levine’s office, according to testimony. Cellini told Levine he no longer had to pay Kjellander for “present and future help” for a business called Compdent Group. Levine previously testified that he had paid Kjellander $75,000 a year as a lobbyist for Compdent, a dental services provider.

A nine-page document issued by U.S. Judge Amy St. Eve just before the trial began discussed other expected testimony involving Kjellander.

According to St. Eve, after Kjellander was paid $809,000 by the Bear Stearns investment company in 2003 in return for helping the firm land an underwriting role in a state pension bond issue, Kjellander loaned $600,000 to Glenview businessman Joseph Aramanda, a Rezko business partner. The government will argue that Aramanda paid about $450,000 to “four separate Rezko assignees,” St. Eve wrote.

Kjellander has said he didn’t know Aramanda was going to pass any money on to others. He said he made the loan because he knew Aramanda and was offered a good interest rate. The loan was paid back within four or five months, he said.

In testimony, Levine also said he received an invitation from Kjellander to attend a White House Christmas party on Dec. 3, 2003. Levine said he took Rezko and his wife and Cellini and his wife to the event in a chartered plane.

While it hasn’t come up at trial, Kjellander also has done business with Rezko. Kjellander was quoted in 2004 as saying his Springfield Consulting Group did some work for Rezmar, a Rezko company, more than a decade earlier. Kjellander said he later had a client with “some issues up in Chicago” and “I asked Tony if he could be helpful.”

Rezko was helpful and shared a fee from the client, so Kjellander listed Rezko as a subcontractor on the state lobbyist list. Rezko remained on the list for about four years. The name was removed when “Tony and I both became aware he was still on my list,” Kjellander said then.

Kjellander could not be reached last week.

BILL CAVANAGH, 55, of Springfield

Cavanagh is an attorney and Capital Township trustee, brother of Sangamon County Treasurer Tom Cavanagh.

Connection to Rezko trial:

Cavanagh, who is fiduciary counsel to the Teacher’s Retirement System, is identified as “Individual M” in the proffer. Individual M “was a lawyer for TRS and an associate of Co-Schemer A” (Cellini), the proffer states.

“Individual M had a close relationship with Co-Schemer A, and had assisted Co-Schemer A and (chief prosecution witness Stuart) Levine in maintaining control at TRS in the past,” the document stated.

The document also describes an April 12, 2004, phone call between Levine and Cavanagh.

“In the call, Levine and Individual M discussed the membership of the TRS Board and how two new trustees who were friendly to their interests would be appointed,” the proffer states. “Levine and Individual M also talked about the possible replacement of the Executive Director of TRS, and how they would arrange to control whatever search firm was chosen to find a replacement for that position.”

Cavanagh did not return calls seeking comment last week.

JAMES BRUNER, 64, of Jacksonville

Bruner is the president of United Contractors Midwest.

Connection to Rezko trial:

Bruner, a member of the TRS board, is identified as “Individual S” in the proffer. Bruner chairs the Good Government Council, the political action committee of the Illinois Asphalt Pavement Association. Cellini is executive vice president of the asphalt pavement group.

The proffer says Levine instructed two other TRS board members — Individual Q and Individual R — “how they needed to vote for various Committee Chair positions in the Board elections, including that Individual S, another trustee who was allied with Levine and Co-Schemer A, should be elected as Chair of the Investment Committee and that Levine should be elected as Chair of the Personnel Committee. ...

“Individual S was elected Chair of the Investment Chair (sic) by a 6-5 vote, with the co-schemer’s voting bloc in the majority by one vote,” the proffer says.

The minutes of the May 25, 2004, TRS meeting show that Bruner was elected, 6-5, as investment committee chair. The nomination was made by Levine and seconded by Schmidt.

Bruner did not return telephone messages.

PHILLIP SCHMIDT, 73, of Springfield

Schmidt is the former principal of Lanphier High School and father of Sangamon County State’s Attorney John Schmidt.

Connection to Rezko trial:

Schmidt is a former TRS board member whose appointment allegedly changed the board’s balance of power.

Schmidt said in 2006 he was astonished when federal prosecutors went after Levine.

“I swore that they made a mistake when he was arrested,” Schmidt told The State Journal-Register when Rezko was indicted. “I liked the guy.”

Schmidt also seemed close to Levine, according to trial testimony from TRS board member Molly Phelan. Phelan testified that Schmidt always sat next to Levine during board meetings and that Levine would whisper to him. Sometimes, Phelan testified, Levine would motion toward Schmidt, and the two men would leave the room.

Reached after Rezko’s trial began, Schmidt declined comment.

“I have not been subpoenaed, so I have nothing to say,” Schmidt said.

Schmidt, who filled a TRS spot reserved for retired educators, was named to the board in August 2001, against the wishes of representatives of active and retired teachers. He was ousted in July 2005 when retired teachers voted for the first time on candidates to fill the seat, which was initially filled by board appointment.

Schmidt’s appointment marked a shift in power on the TRS board, which had previously been split equally between elected representatives of teachers and political appointees, prosecutors say. Immediately after being named to the board, Schmidt voted to install Bauman as executive director, even though he wasn’t familiar enough with management to be able to take such a vote, prosecutors say.

Bauman has worked for TRS since 1993. As executive director, he is paid $228,975, more than the governor.

Every member of the TRS board who was elected by teachers voted against Bauman when he became executive director in 2001, after political appointees gained control of the board.

“He’s a career Springfield bureaucrat,” said former TRS board member Scott Eshelman, a retired teacher who was ousted from the board during the same meeting where Bauman was promoted. “His only claim to fame is that he survived various administrations on TRS.”

Bauman responded evenly during a February interview.

“That’s his opinion, and he’s certainly entitled to it,” Bauman said.

Prosecutors say Bauman was aware of part of a “pay-to-play” scheme as early as the spring of 2004, when Levine told him that an investment firm wouldn’t get TRS money unless it made a political contribution.

Levine also has testified that Bauman owes much of his success to Cellini. Levine said he helped engineer Bauman’s promotion to executive director because that’s what Cellini wanted.

“He (Cellini) told me he had known Jon Bauman a very long time, that he’d helped Jon Bauman get a number of jobs Jon had had in Springfield,” Levine testified. “Jon Bauman was a person who would do what Mr. Cellini asked.”

Bauman did not respond to interview requests from The State-Journal Register last week. But he defended himself in an interview with The Associated Press after Levine testified about Bauman’s relationship with Cellini.

“In order to be successful in this position,” Bauman said, “the director has to not only be competent but hold himself to a fiduciary standard of behavior.”

PHIL BRADLEY, 60, of Springfield

Bradley works in Chicago as president and CEO of Family Health Network.

Connection to Rezko trial:

Bradley is a former a member of the Illinois Health Facilities Planning Board. He was not reappointed by Gov. Rod Blagojevich.

Bradley believes he was listed on an e-mail that was brought up at the trial. That e-mail, from an associate of David Wilhelm, a Blagojevich campaign advisor, identified board members who would be OK to reappoint.

Bradley said Monday he has never met or talked to Rezko. Levine was on the health facilities board when Bradley was a member, Bradley said, but Levine “wasn’t at every meeting.”

“I said hello to him once or twice,” Bradley said. He said Levine never tried to influence him on any vote.

Bradley also said he has not been interviewed by federal agents, and he has no reason to think he’ll be called to testify.

“I haven’t talked to anyone about this case except some friends and you,” Bradley told a reporter.

MIKE BARTLETTI, 56, of Springfield

Bartletti is the director of real estate for the Teachers’ Retirement System.

Connection to Rezko trial:

Bartletti said he was interviewed by someone from the U.S. attorney’s office in Chicago.

“It was background,” he said. Bartletti does not expect to be called to testify.

STAN RUPNIK, 36, of Springfield

Rupnik is TRS’s chief investment officer.

Connection to Rezko trial:

Rupnik said that his time at TRS began near “the tail end of events that investigators are looking at.”

“Stuart (Levine) was on the board when I joined TRS, but that was only for a couple meetings,” Rupnik said. “The only time I dealt with him was in meetings.”

Rupnik said he has been questioned as part of the investigation, but he doesn’t know if he will be called to testify. He said he thinks he was questioned so investigators would know “if I can provide background.”

He said he “absolutely” did nothing wrong during his TRS job.

BILL ENLOW, 60, of Springfield

Enlow is a lawyer, lobbyist and former school board member.

Connection to Rezko trial:

Enlow served on the TRS board from the fall of 1996 through mid-July 2002, according to board records. He did not return phone calls asking why his name was included in the list jurors received.

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